CAMPAIGN REPORT ON HEALTHCARE: Fit for the world - The world’s major advertising agencies are falling over themselves to get into the field of healthcare. Why now, and why specifically the UK market? Karen Yates reports

Just what are the big networks on? It has been like the first day of Harrods’ sale over the past 12 months as the world’s big advertising names have jostled for a piece of the healthcare action in the UK. WPP, for example, has swooped on a key London drugs specialist, while the Lowe Group has acquired two new British companies. Grey Healthcare has restructured to make London its global hub, Leo Burnett has kicked off a new Life Brands arm, and while the others are buying in new expertise, McCann-Erickson has been quietly adding weight like a body-builder on steroids.

Just what are the big networks on? It has been like the first day

of Harrods’ sale over the past 12 months as the world’s big advertising

names have jostled for a piece of the healthcare action in the UK. WPP,

for example, has swooped on a key London drugs specialist, while the

Lowe Group has acquired two new British companies. Grey Healthcare has

restructured to make London its global hub, Leo Burnett has kicked off a

new Life Brands arm, and while the others are buying in new expertise,

McCann-Erickson has been quietly adding weight like a body-builder on

steroids.



What does it all mean? Why is this lucrative but, until now, rather

neglected corner of the communications world suddenly so much in

demand?



Naturally, multinational agencies are expanding outside their core

activities in search of better margins. But why healthcare, and why

now?



It appears that the answer lies partly in our own backyard and partly

with the drugs companies, which have undergone nothing short of a

revolution in their thinking over the past few years.



Recent changes to European law mean it is now possible to launch new

drugs right across Europe at a single stroke, rather than laboriously

seeking approval first in one country and then in another. As luck would

also have it, the new Euro quango responsible for this harmonised

approach is sited in London, which has turned the capital into an ideal

spot for hatching pan-European strategy. But although this happy

coincidence has played a part in the new lease of life for healthcare

agencies in London, it is not enough to explain the frenetic pace of its

expansion. For that we have to turn to more profound forces shaping the

industry. Those in the healthcare sector will be well aware of them, but

this is vital background for the uninitiated and serves as a reminder to

insiders.



First, size. The pharmaceutical groups are now bigger than ever, as more

than a decade of mergers and takeovers has borne fruit. Most recently,

the UK’s Zeneca and Sweden’s Astra proposed the largest ever European

merger. And last month’s union between the French group, Rhone-Poulenc,

and Germany’s Hoechst, for example, will create a monster corporation

with sales of dollars 20 billion - equivalent to the GDP of a small

country - when it is finalised in three years’ time. Yet these are soon

likely to be eclipsed as the merger frenzy rages on. Every couple of

years seems to bring another pharmaceutical Goliath to life.

Ciba-Geigy’s pounds 32.8 billion deal with Sandoz to form Novartis in

1996, for example, or Glaxo’s pounds 9.1 billion takeover of Wellcome,

or the pounds 8.8 billion marriage between Sweden’s Pharmacia and the US

giant, Upjohn.



The fact is that drugs groups have even more of a financial imperative

to merge than other industrial companies. Like other areas,

pharmaceutical manufacturers are coming under pressure to exploit

synergies and economies of scale by joining up with former rivals. But

drugs companies also face a far more intractable problem: declining

profits from the very thing that makes them most money - product

launches.



This decline can best be explained by reflecting on a bit of medical

history, beginning perhaps with when Aspirin was first developed by

Bayer at the turn of the century. This revolutionary product offered

consumers something they had never had before. For the first time, they

could look forward to reliable, affordable pain relief with hardly any

fear of addiction, and Bayer was able to price its product accordingly.

Even better, decades went by before any serious rivals to Aspirin

arrived on the scene to nibble away at profits. Ninety years on,

however, things are not so rosy. New technology means that scientific

breakthroughs do not remain exclusive for long. In the old days, years

could pass before teams in one lab found out about work going on in

another part of the world. But huge leaps in laboratory techniques,

cheap flights, e-mail and telephones have changed all that. When Eli

Lilly’s Prozac produced a similar revolution in the treatment of

depression in the late 80s, the new wonderdrug only had the field to

itself for a few paltry years before competitors started piling in.



In short, the whole healthcare industry is working at a time when

pharmaceutical breakthroughs - the lifeblood of drugs companies - have a

much shorter lifespan, though they are more expensive than ever to

produce. Industry observers estimate that it can cost dollars 500

million to take a new product from the twinkle-in-the eye stage to the

customer. So it makes good sense for drugs companies to merge.



’If you’ve got 200 people working away somewhere on a particular project

and another company has another 200 working on the same thing, then it

makes sense to pool them,’ John George, Grey Healthcare’s worldwide

chief executive, points out. ’You get much more bang for your bucks by

doing it.’



By bulking up to become a more global entity, you can also try and steal

a march on competitors by launching your product almost instantaneously

in different parts of the world. ’Back in the golden days, you could

just sit back and make lots of money with new drugs,’ George says. ’So

you could afford to introduce a new product country by country.

Sometimes it was ten years before competitors arrived. Now you are lucky

if you get more than a few months.’



This has given rise to an almost entirely new phenomenon in

pharmaceuticals: the global launch. Cheaper than a piecemeal approach,

it also offers more breathing space for the top companies. The downside

is that you can’t learn from your mistakes in one country to help with

the next - it has to be right first time - but at least your product is

at the same stage in all its markets. However, global launches are

incredibly complex operations to mastermind. To tackle a project of this

immensity, the thinking runs, you need a global agency and this is the

force that has been driving agencies to assemble their own, more

coherent, networks around the globe. Eli Lilly, according to Grey’s

George, provided a good example of this new, swifter and more global

approach when it recently launched its anti-psychotic drug, Xyprexa. The

company filed it in all key markets around the world in just 24 hours -

you can’t do that from a phone and a fax in Indianapolis.



For this kind of co-ordination you need a tight, concerted international

team that can work together over a period of time and across all points

of the globe. In the increasingly sophisticated and complex mechanics of

a major drugs launch, however, it must work across a number of

disciplines as well as advertising and it is these ancillary fields that

have shown the most growth.



’Far beyond advertising, it’s a whole matrix of different communications

that the drug companies have at their disposal,’ is how Paul Paech, the

creative director of Medicus, describes the global launch process.



Today’s drugs launches, for example, will need specialised market

research and clinical trials. Studies may have to be conducted on how

well patients will take - and stick to - different medical regimes, a

process called ’patient compliance’ or ’adherence’. There will also be

relationship marketing, sales promotion and public relations, not to

mention its more specialised cousin, ’medical education’. Medical

education, or ’med ed’ as it is known, is a relatively new discipline,

which ranges from the simple production of pamphlets for possible

patients, to the altogether more complex task of approaching medical

opinion-formers in order to influence their approach to a disease or

syndrome.



If you were launching an anti-obesity drug, for example, you may wish to

alert doctors to the health problems of being overweight. In this way,

when a patient comes in wanting to shed some excess pounds, his or her

request is likely to be taken seriously. If the condition is viewed as a

valid one in the first place, your new drug to alleviate it will be more

likely to be prescribed. In case you doubt this approach works, just

consider how many of us had heard the term ’male erectile dysfunction’

before the advent of Viagra.



WPP’s CommonHealth claims to be the biggest healthcare group in the

world, with 13 different units and billings of dollars 875 million. In

1997, it plucked Gil Bashe from its Hill & Knowlton public relations

company to oversee its formal expansion worldwide, and Bashe has taken

to his role with vigour.



Last year, for example, the chief executive of CommonHealth set up a med

ed joint venture in London with Health Learning Systems, one of the

largest med ed companies in the US, as well as buying the UK’s Gower

Advertising.



The Lowe Group has also made expansion into the medical area a

priority.



John Puglisi, the chairman of Lowe Healthcare, has identified core

markets around the world which drugs companies feel are key to their new

way of working - the big five in Europe, plus Australia, China and

Japan; North America as well as the three key Latin American countries

of Argentina, Brazil and Mexico.



’Europe will be finished by the end of this year,’ Puglisi says of his

acquisition plans. Last year, these included acquiring the UK’s Azure

Advertising as well as London’s healthcare public relations and med ed

company, Fusion. The three-year-old Lowe Healthcare also took on board

the 20-year-old US company, Grob Health & Science.



At the same time, Burnetts has started up its own healthcare arm, Leo

Burnett Life Brands, using people from Grey Healthcare, while Omnicom

has acquired one of the biggest med ed groups, Adelphi. Meanwhile, the

early pioneers among the mainstream networks venturing into healthcare

have been quietly beefing up their offering as well.



McCanns, for example, has been increasing staff on its so-called

’healthcare corridor’, and recently opened an office in London to

complement existing operations run from Manchester. At the same time,

Medicus, the UK’s largest healthcare specialist and an offshoot of

DMB&B, has been adding refinements to its wholly owned units. ’The best

agencies have had to become more professional and consumer-oriented. For

example, we’ve introduced our own planners into Medicus. It’s about

understanding your consumer,’ Niall Breen, the managing director of

Medicus UK, explains.



The trigger for much of this activity has been the phenomenal success of

a new experiment in the US, which has allowed drugs companies to

advertise prescription-only products direct to the consumer for the

first time.



It is only a year into a two-year trial of such advertising, but the

impact has already been monumental. Sales of advertised brands have shot

up and drugs companies are so impressed with this new avenue of dialogue

that they are expected to pile an extra dollars 2 billion a year into

this advertising, known as DTC. That’s dollars 2 billion over and above

their usual communications activities. In addition - and here’s the real

revolution - drugs companies have begun to realise that their market is

not just a few doctors, but everyone in the world. In short, they’ve

discovered the thrill of operating in a world where everyone is a

potential consumer.



’The new mergers, such as Glaxo Wellcome and Novartis, have produced

much more globally focused and powerful marketing machines,’ explains

Martin Godfrey, the head of Hill & Knowlton’s European health and

pharmaceutical practice. ’They understand that they are not just talking

to doctors but now see every single person in the world as their

market.’



Puglisi agrees. He says the American experience has given everyone new

enthusiasm for the role of communications in the sale of drugs. ’Frank

Lowe saw the opportunity because he saw how close the drugs companies

are getting to the patient - especially in the US and now in the UK.

People want more information.



They want to know about diseases and drugs.’



DTC advertising still seems a long way off on this side of the Atlantic,

where it is mostly governments, rather than healthcare companies, who

foot the drugs bills. But the first tentative steps have already been

taken in that some drugs firms have begun ’symptom advertising’.



Symptom advertising is where a company will describe a medical

condition, discuss the fact that appropriate medication may be available

and perhaps show a company logo, but it does not mention the drug’s

name.



In the UK, for example, Novartis, which produces treatment for fungal

nail infections, this summer began advertising its support of a drive to

treat this particular condition.



It was from such humble beginnings that drugs companies finally won the

right to advertise prescription-only drugs in the US, so the

pharmaceutical giants - and their agencies - are sanguine that the same

may eventually happen here.



As George, a veteran of the US drugs industry, says: ’In the US, we like

to think we’re the cutting edge. But years later we’re still doing the

same thing. Over here it’s different. We keep on saying we’ll never do

something and then it goes and happens overnight. We, for one, are going

to be ready for the day when it comes.’



TOP 15 HEALTHCARE AGENCIES RANKED BY DECLARED BILLINGS

Rank  Agency                                               Declared 1998

                                                                billings

                                                              (pounds m)

                                                                    1998

1     McCann Healthcare UK                                          26.6

      Clients: Bristol-Myers Squibb, Glaxo Wellcome,

      Hoechst Marion Roussel, Janssen-Cilag, Johnson &

      Johnson, Vistakon, Merck Sharp & Dohme, Novo

      Nordisk, Reckitt & Colman, SmithKline Beecham, Zeneca

2     Bray Leino                                                    25.0

      Clients: Roche Diagnostics, Zeneca, Organon,

      Smith & Nephew, Cochlear, Dermal, Coloplast,

      GR Lane, Dendron, Thornton & Ross, Baxter, Jacksons

3     Paling Walters Targis                                         20.0

      Clients: Bristol-Myers Squibb, Collagen, Eli Lilly,

      Glaxo Wellcome, Janssen-Cilag, Medical Defence Union,

      Merck, MSD, Pasteur Merieux MSD, Pfizer, Rhone-Poulenc

      Rorer, SmithKline Beecham, Zeneca, Ciba-Vision, ICN,

      Molnlycke, Schering-Plough, Boots Healthcare,

      Bausch & Lomb

4     VB Communications                                             18.2

      Clients: Abbott, Bristol-Myers Squibb, Ipsen, Knoll,

      Norgine, Pharmacia & Upjohn, Rhone-Poulenc Rorer,

      SmithKline Beecham Biologicals, Sankyo, Wyeth

5     Bates Healthcare                                              17.5

      Clients: Astra, Novartis, Digene, Solvay, Lorex,

      Biogen, Leo, IPPF, Organon, Pharmacia & Upjohn,

      Robinsons, Roche, Unilever, Superdrug, Warner Lambert

6     Saatchi & Saatchi Healthcare                                  17.0

      Clients: Merial, Galderma, Merck Sharp & Dohme,

      Searle, Pharmacia & Upjohn, Sanitarium,

      Roche, Johnson & Johnson, Schering Plough

7     PTK Healthcare                                                16.0

      Clients: Stafford Miller, Carter-Wallace, Co-Pharma,

      Pharmax Healthcare, Novartis, Roche

8     Brader Perryman                                               11.0

      Clients: 3M Healthcare, Astra Pharmaceuticals,

      Glaxo Wellcome, Searle

9     Matthew Poppy                                                 10.8

      Clients: Novo Nordisk, Abbott Laboratories,

      Bristol-Myers Squibb, Pharmacia & Upjohn, Bard,

      Janssen-Cilag, Convatec, SmithKline Beecham, Biogen,

      Genzyme, Link

10    Herman Beasley                                                10.6

      Clients: Asta Medica, Bioglan Laboratories, Chefaro

      Proprietaries, Hollister Europe, Hufels Pure Foods,

      Johnson & Johnson, MSD Consumer Pharmaceuticals,

      Merck Consumer Health, New Era Laboratories,

      Novartis Nutrition, PBI, Rhone-Poulenc Rorer, Abbott

      Laboratories, Ross Products Division, Seven Seas

11    Medicus UK                                                     9.9

      Clients: Crookes UK, Hoechst Marion Roussel, Merck,

      Philips, Procter & Gamble, Reckitt & Colman, Roche,

      Sanofi, SB, Schering, Teva

12    Money Syner Communications Media                               9.2

      Clients: Merck Sharp & Dohme, Boehringer Ingelheim,

      Napp Laboratories, Schering Healthcare, Roche,

      Pasteur Merieux MSD, Asta Medica, Orion Pharma (UK),

      Ferring Pharmaceuticals, Boeringher Mannheim

13    Lane Earl & Cox Advertising                                   8.0

      Clients: Astra Pharmaceuticals, Astra AB, Department of

      Health, Eli Lilly & Co, Medisport, Novartis, Pfizer,

      Pharmacia & Upjohn AB, Pharmax, Searle, Wyeth Laboratories

14    Euro RSCG                                                      7.7

      Clients: Bayer, Peter Black Healthcare, Glaxo Wellcome,

      Janssen-Cilag, Novartis, Mentholatum MSD, Merial,

      Pharmacia & Upjohn, SmithKline Beecham, SMA, Stiefel,

      Smith & Nephew

15    Lowe Azure                                                     7.5

      Clients: Cow & Gate Nutricia, Hoechst Marion Roussel,

      Janssen-Cilag, Eli Lilly, Napp Pharmaceuticals,

      Parke Davis, Schering Plough, Wyeth

Footnote: Table shows agency name and major pharmaceutical clients.

Supplied billings in pounds m compiled by MMS

TOP TEN HEALTHCARE ADVERTISERS RANKED BY MMS OCTOBER 1997 - SEPTEMBER

1998

Rk  Agency                            Total         Press     Cinema

                                   (pounds)

    Selected Market             192,532,002    66,241,292    850,366

1   Procter & Gamble             14,855,190       436,722          0

2   SmithKline Beecham

    Health Care                   9,490,132       826,897          0

3   Crookes Healthcare            8,369,688       856,626      1,157

4   Warner Lambert

    Consumer Healthcare           6,770,140     1,382,640          0

5   Reckitt & Colman

    Products                      6,750,827       297,482          0

6   Whitehall

    Laboratories                 6, 518,315     2,541,710          0

7   Roche Consumer

    Healthcare                    6,292,729     1,103,663          0

8   Pharmacia & Upjohn            6,161,216     1,223,495          0

9   Johnson & Johnson             5,845,625       378,903          0

10  SCA Hygiene Paper

    UK                            5,668,522       207,738          0

Rk  Agency                             Radio      Outdoor     Television

    Selected Market               11,555,633    4,609,847    109,274,864

1   Procter & Gamble                 169,205            0     14,249,263

2   SmithKline Beecham

    Health Care                      204,533      407,879      8,050,823

3   Crookes Healthcare               661,096      308,801      6,542,008

4   Warner Lambert

    Consumer Healthcare              705,403      417,607      4,264,490

5   Reckitt & Colman

    Products                             602      188,416      6,264,327

6   Whitehall

    Laboratories                       4,464            0      3,972,141

7   Roche Consumer

    Healthcare                       465,928            0      4,723,138

8   Pharmacia & Upjohn               345,106    1,700,866      2,891,749

9   Johnson & Johnson                  5,012            0      5,461,710

10  SCA Hygiene Paper

    UK                               522,321            0      4,938,463

TOP FIVE HEALTHCARE MEDIA BUYING SHOPS RANKED BY MMS OCTOBER 1997 -

SEPTEMBER 1998

Rk  Agency                             Total        Press         Cinema

                                    (pounds)

    Selected Market              192,532,309   66,241,599        850,366

1   BMP Optimum                   21,925,257    4,435,411        374,658

2   Zenith Media                  15,770,423    3,809,006              0

3   Saatchi & Saatchi             14,781,659      378,021              0

4   Mediacom                      12,181,929    1,536,909              0

5   CIA Medianetwork UK           10,855,725    5,133,693              0

Rk  Agency                             Radio      Outdoor     Television

    Selected Market               11,555,633    4,609,847    109,274,864

1   BMP Optimum                      740,761      416,595     15,957,832

2   Zenith Media                     385,760    1,702,038      9,873,619

3   Saatchi & Saatchi                169,205            0     14,234,433

4   Mediacom                         208,330      407,879     10,028,811

5   CIA Medianetwork UK               15,989            0      5,706,043

These reports are sourced using the MMS pharmaceutical category



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Digital marketing executives oversee the online marketing strategy for their organisation. They plan and execute digital (including email) marketing campaigns and design, maintain and supply content for the organisation's website(s).